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Tariff Wars and Trade Deals With Costly Government

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Abstract

We study a simple model of tariff wars and trade deals in which government revenue collection and disbursement uses resources. The introduction of a costly government leads to lower non-cooperative tariffs, the possibility that a less costly government may win a tariff war, and fully cooperative trade deals where countries lower tariffs but do not eliminate them, even with lump-sum taxes and transfers.

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  • John B. Burbridge & Gordon M. Myers, 2000. "Tariff Wars and Trade Deals With Costly Government," Discussion Papers dp00-15, Department of Economics, Simon Fraser University, revised 08 Jun 2000.
    • Handle: RePEc:sfu:sfudps:dp00-15
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    1. John Burbidge & Gordon Myers, 2004. "Tariff Wars and Trade Deals with Costly Government," Review of International Economics, Wiley Blackwell, vol. 12(3), pages 543-549, August.

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